Sales and Use Tax Exemption for Tribal Telecommunication Infrastructure Projects

Effective July 1, 2023, an exemption from sales and use tax applies to the construction of a qualified infrastructure project by a qualified infrastructure project owner. The exemption expires on the date the project is certified as operationally complete or on January 1, 2030, whichever is first.

What qualifies for the exemption

Construction materials that are incorporated into, and retail services provided in respect to, the construction of a qualified infrastructure project are exempt from sales and use tax. Examples of goods and services may include, but are not limited to:

• Building materials.
• Construction labor.
• Telecommunication equipment.

Examples that don’t qualify

• Dyed fuels.
• Form lumber.
• Tools.
• Rental of heavy equipment.

Documenting the exemption

To document the exempt nature of sale, the qualified infrastructure project owner must provide a copy of the department of revenue issued exemption certificate to their seller. Sellers will provide the sales tax exemption at the point of sale, keeping a copy of the exemption certificate in their records for five years. A deduction from sales tax is provided on the return under “Tribal Qualified Internet/Telecom Infrastructure Project.” Sellers will continue to report their income under the Retailing Business and Occupation (B&O) tax classification. 

Definitions

Qualified infrastructure project means the construction of buildings and utilities related to the deployment of a modern global internet and telecommunications infrastructure that occurs in part in a distressed area, as defined in RCW 43.168.020, that is located on the coast of Washington. The infrastructure may include, but is not limited to, cable landing stations, communications hubs, buried utility connections and extension, and any related equipment and buildings that will add broadband capacity and infrastructure to the area.

Qualified infrastructure project owner means a wholly owned subsidiary of a federally-recognized tribe located in a county that borders the Pacific Ocean that is developing a qualified infrastructure project.